It’s a harsh truth that a Merton residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the early years due to the loss of value being disguised by increases in the Merton property prices.Once your lease nears 85ish years, you should start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips below eighty years - otherwise a higher premium will be due. The majority of flat owners in Merton will be able to extend under the legislation; however a conveyancing solicitor should be able to confirm whether you are eligibility. In some situations you may not be entitled. There are also strict timetables and procedures to follow once the process is instigated and you will need to be guided by your lawyer throughout the formalities.
It is conventional wisdom that a property with over one hundred years remaining is worth roughly the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the property will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 85 years from the date of completion of the mortgage. Please ensure that you explain the implications of a short term lease to the borrower. |
| Coventry Building Society | A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Lease extensions in Merton can be a difficult process. We recommend you obtain professional help from a lawyer and surveyor with experience in this area.
We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have in-depth market knowledge dealing with Merton lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
Hunter owned a high value apartment in Merton on the market with a lease of a little over 59 years remaining. Hunter on an informal basis approached his landlord a well known local-based freehold company for a lease extension. The landlord was keen to give an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £100 per annum. No ground rent would be payable on a lease extension were Hunter to invoke his statutory right. Hunter procured expert advice and was able to make an informed judgement and deal with the matter and readily saleable.
Mr Toby Murphy purchased a ground floor flat in Merton in August 2002. The question was if we could approximate the premium could be for a ninety year lease extension. Similar properties in Merton with a long lease were in the region of £260,000. The mid-range amount of ground rent was £50 collected quarterly. The lease ended in 2098. Having 72 years unexpired we estimated the compensation to the freeholder to extend the lease to be within £9,500 and £11,000 plus fees.
In 2012 we were approached by Mr and Mrs. H Patel who, having purchased a first floor flat in Merton in September 2009. We are asked if we could estimate the premium could be to prolong the lease by an additional years. Identical premises in Merton with an extended lease were worth £261,600. The average amount of ground rent was £60 invoiced quarterly. The lease ended on 16 October 2078. Taking into account 52 years as a residual term we approximated the premium to the freeholder to extend the lease to be between £39,000 and £45,000 plus legals.